Our view: Legacy Fund: Only for future ideas, dreams

Meanwhile, Norway has its Sovereign Wealth Fund, which transfers revenue generated by oil production into a national savings account. In 2017, it surpassed $1 trillion; by comparison, that savings account is as large as many countries’ full economy.

Norway doesn’t pay its citizens an annual stipend from the account but instead continues to invest its fund for the future. Since Norway has a population of 5.2 million, the fund equals about $190,000 for each citizen in that country — yet the forward-thinking government there has resisted the urge to disburse the money individually.

As difficult as it may be for some to hear, Norway’s approach is the better strategy. Alaska’s annual checks are no doubt popular, but the $1,500 or so given to each resident doesn’t do much to position Alaska for a future without oil; Norway’s approach does.

All of this is relevant in North Dakota as lawmakers consider ideas for the state’s Legacy Fund, which was created in 2010 and sets aside 30 percent of oil and gas tax revenue into a savings account that already has surpassed $6 billion. As it continues to grow, it likewise will continually be forced to resist so many hands reaching out for a piece of the lucrative pie.

A proposal arose last week to use Legacy Fund earnings to reduce income taxes for North Dakota residents. House Bill 1530 would divert half of the Legacy Fund’s earnings each two-year budget cycle to an income tax rate reduction fund. The bill’s sponsor, Rep. Craig Headland, R-Montpelier, said the bill could help attract new residents to the state.

“How many billions of dollars’ worth of visionary, one-time projects does this state need?” Headland asked.

Answer: Many. And that kind of big thinking is exactly the point of the Legacy Fund.

For example, Gov. Doug Burgum this year is suggesting using Legacy Fund earnings — earnings and not the principal — to help fund a proposed Theodore Roosevelt Presidential Library and Museum. Since there is no other Teddy Roosevelt library in the nation, and since Roosevelt has strong ties to North Dakota, we see this as an innovative use of Legacy Fund-generated dollars.

The governor also has proposed using $30 million in Legacy earnings to fund a statewide infrastructure network for unmanned aerial systems. Again, there’s another innovative idea that would strengthen North Dakota’s standing as the nation’s most friendly UAS environment.

While using Legacy earnings to offset income taxes isn’t necessarily a direct disbursement to the state’s residents, we don’t see it as an innovative idea that will, as the governor wishes, “have region or national impact” or have “lasting impacts beyond our current generation.”

Of the states that have an income tax, North Dakota’s is the lowest rate. The state also has a low average state income-tax bill of $866.

Saving residents that money would be nice, but it doesn’t equate to innovative and lasting future endeavors.